2017 (1) TMI 467 - AT - Customs

Tribunal rules in favor of appellant in customs valuation case, finding no related relationship.

M/s. Inovision Versus Commissioner of Customs (I), Mumbai

The Tribunal found in favor of the appellant in a case concerning the enhancement of the value of imported goods. It was determined that the appellant's ... Valuation of imported goods - related party - enhancement of value - related party transaction - Held that: - A reading of the contract clearly indicates that the appellant has to import the goods and sell the same at the maximum price decided by the supplier himself does not mean that appellant and supplier are related. On perusal of the exporter’s price list, we find that the price declared by appellant for the consignment in question is in accordance with the price list as published by the supplier. The said price list produced by appellant is not disputed by the revenue. The restrictive clauses are general clauses, always agreed upon by the seller and the purchaser in order to have healthy business relations and cannot be considered as a clause which denotes the relationship as per provisions of Rule 2(2) of the Customs Valuation Rules, 1988 - the enhancement of value not justified - appeal allowed - decided in favor of appellant. Issues involved:Enhancement of the value of imported goods by the appellant.Analysis:The appeal in this case concerns the enhancement of the value of goods imported by the appellant. The appellant initially imported one projector at a certain price and later imported nine more projectors at a different declared price. The matter was referred to the Gatt Valuation Cell, which determined the assessable value of the nine projectors as being related to the supplier from Germany. The appellant argued that they were appointed as a distributor on a non-exclusive basis and had various clauses in the agreement with the supplier regarding pricing and restrictions on selling similar products. The appellant contended that the lower authorities erred in considering them related to the supplier under Rule 2(2) of the Customs Valuation Rules, 1988. The Departmental Representative supported the findings of the lower authorities.Upon reviewing the submissions and records, the Tribunal found in favor of the appellant for multiple reasons. Firstly, the contract indicated that the appellant was appointed as an importer and distributor on a non-exclusive basis, with the right to appoint additional distributors lying with the supplier. The appellant had to sell the goods at the maximum price decided by the supplier, which did not establish a related relationship. The price declared by the appellant matched the supplier's published price list. Secondly, the contract clearly designated the appellant as an importer, with clauses restricting the sale of identical products and participation in competitor products, which were standard business clauses and did not indicate a related relationship as per the Customs Valuation Rules, 1988.Based on the above analysis, the Tribunal concluded that the lower authorities erred in enhancing the value of the imported consignment. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief deemed necessary.